Educational Fraud

The federal False Claims Act broadly prohibits anyone who does business with the federal government from engaging in fraudulent behavior. Accordingly, there are innumerable circumstances where such fraud may occur, and in which a Whistleblower may bring an action to expose the fraud and recover appropriate damages. An example of such fraud includes:

Every year the Department of Education makes billions of dollars of loans available to students to help them pay for higher education at public, private non-profit, and private for-profit (also known as proprietary) schools. In order to qualify for these funds however, both students and schools must satisfy certain eligibility requirements. Cases of student loan fraud often involve institutions of higher learning making false statements to the Department of Education in order to meet these requirements.

Common fraudulent schemes employed by schools to enable otherwise ineligible students to qualify for federal student loans:

Students without a high-school diploma or GED can qualify for federal loans, grants, and campus-based aid if they pass an “ability to benefit” test, which is an independently administered test of basic Math and English skills. Giving out the answers to, or falsifying the result of such tests can result in False Claims Act violations;

Violating regulations governing the administration of ability-to-benefit tests, such as school officials administering the test instead of independent test administrators, or failing to follow rules governing when students can retake the test on the same form; and

Assisting students to obtain invalid high-school diplomas from diploma mills.

Educational institutions may also commit fraud by failing to abide by certain Department of Education regulations for which compliance is required in order to qualify and maintain eligibility for receipt of federal student loan funds. Examples of such fraud include:

Compensating employees based on their success in securing student enrollments;

Falsely reporting student loan default rates; and

Falsely reporting of student enrollment and graduation data.

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